EON Shareholders Warn Against ‘Burning’ Money in Turkey, Brazil

May 3 (Bloomberg) -- EON SE, Germany’s largest utility,
defended its expansion into Brazil and Turkey against criticism
from shareholders at the annual general meeting today.

We have “the impression EON earns its money in Germany to
burn it abroad,” Ingo Speich, a portfolio manager at Union
Investment GmbH, a top-10 holder of the shares, said at the
meeting in Essen. “Synergies across national or even
continental borders are rare in the energy industry.” Other
shareholders also pointed to the risks of the expansion.

EON has teamed up “with good, strong partners,” Chief
Executive Officer Johannes Teyssen told shareholders. “Brazil
and Turkey will be a great pleasure for you.”

European utilities are contending with weaker demand and a
slower economic outlook ahead of Germany’s planned exit from
nuclear energy by 2022. EON, which scrapped previous profit
forecasts for 2013, plans to reduce capital spending and is
selling assets to cut costs. The Dusseldorf-based utility, which
is increasingly focusing on expansion abroad, is also studying
whether to close unprofitable power plants at home.

EON today confirmed a forecast from January that this
year’s adjusted net income, which the company uses to calculate
its dividend, will drop to 2.2 billion euros ($2.9 billion) to
2.6 billion euros from 4.2 billion euros a year earlier. Chief
Executive Officer Johannes Teyssen said at last year’s AGM that
it’s “clear that EON has gotten past the worst and that our
room for maneuver increases with each passing day.”

Growing Markets

EON will reduce its annual investments from 7 billion euros
in 2012 to about 6 billion euros this year and to 4.5 billion
euros in 2015, the company said in March.

In a move that signals a shift to faster-growing markets,
the utility said in March it plans to increase its stake in
Brazil’s MPX Energia SA to 36 percent, paying billionaire Eike
Batista as much as 1.56 billion reais ($776 million). EON plans
to raise more than 2 billion euros in the next two years selling
regional units and a stake in nuclear-fuel processing business
Urenco.

RWE AG, Germany’s second-largest utility, said in March it
will sell its Dea oil and gas unit to cut capital spending after
scrapping a target for asset disposals of 7 billion euros by the
end of the year. The Essen-based company reported a 28 percent
decline in 2012 net income to 1.31 billion euros.